How Korea Continues to Surprise the Coffee World

In terms of coffee, few countries can tell a rags-to-riches story as well as South Korea. If you visited Seoul in the 1980s, among other surprises you would have found an almost complete lack of coffee culture. Proper cafés were considered elite institutions. Good roasters were hard to come by.

Visit today, and you’ll find more than 18,000 cafés competing for your attention in Seoul alone. That’s more than you can find in New York and Seattle combined. What’s behind this rapid growth? Part of it could be a Korean openness to trends; a tendency to grab new ideas and push them to their limit. Korea is a collective society, and when ideas catch on here they can spread like wildfire, which Korea reaffirmed with their recent indulgence for cryptocurrency.

But coffee on the peninsula has proven to be more than just a trend. While competition is stiff for cafés, many have managed to fill tables on a daily basis. Award-winning baristas have proven that Koreans have a keen sense for specialty coffee, and will be a country to watch in coming years. Now we’re seeing new innovations in coffee products like roasters and home brewing equipment. Through a history of craftsmanship, a thirst for innovation, and a penchant for good design, Korean brands are carving out an increasingly larger piece of the international market.

Many cafés soon close

In 2016 Korea imported more than 159,000 tons of coffee products from green and roasted beans to coffee capsules. That volume was up 10% over the previous year. If the Korean market bloomed late, it’s surely making up for lost time.

But if 18,000 cafés sound like a lot, that’s because it is. The bull market of Korean cafés has become sluggish, and newcomers especially are finding the space too saturated to profit. Closures for new cafés were estimated at 55% in 2017, and even long-running giants like Café Droptop have been forced to make cuts.

On the other hand, suppliers who’ve managed to price themselves effectively have found enormous success. Coffee sales at 7-Eleven, run in conjunction with Korean conglomerate Lotte, grew 88% in 2015 after they began selling their own drip coffee for KRW1,000 won (.94 cents USD). And McDonald’s nearly tripled their sales after cutting the price of their coffee from KRW2,100 down to KRW1,500 early last year. Korean consumers have welcomed ready-to-drink (RTD) coffees into their convenience store fridges as a quick alternative to coffee house brews. Back in 2011, RTD coffee sales rose an impressive 14.6%, before cooling off in 2013-14 to growth rates of 7.1% and 1.9% respectively. But according to the 7-11 store chain, those numbers are back on the upswing. Both the plastic cup and can offerings of RTD coffees saw growth of 9.1% in 2015, 12.6% in 2016, with a slower 6.4% last year.

Different types of packaging in RTD products have helped the industry diversify, with pouches earning popularity for their convenience, especially in South Korea’s hot summer months. But the can still reigns supreme over the RTD market, comprising over 50% of sales.

Consumers in Korea are beginning to expect superior taste from grab-and-go products as well, as imports of single-origin beans for RTD products are set to grow. The single-origin trend for RTD marks a meeting point of quality and convenience that is striking a chord with the fast-paced yet taste-savvy lifestyle Koreans enjoy.

Instant history

The early days of Korea’s coffee growth exposed a strong preference for instant coffees, but it may be wearing off. Instant powders were for many years the only coffee available in Korea, introduced to a then impoverished country by the U.S. military.

This exposure allowed Korea time to appreciate the convenience of many instant products, leading to their fondness for solubles.

But while instant coffee is becoming more premium and diverse, sales are not responding like they are for RTD. After 4.3% growth in 2012, instant coffee sales fell sharply in 2013-14, each time by a margin of 10-12%. That’s likely a result of increasing RTD sales, an abundance of stylish cafés selling cheap coffee, and advances in home brewing technology.

It doesn’t help that news agencies and health-conscious consumers became aware of the health risks associated with the high-sugar content of most soluble products. Similar risks exist for high-sugar RTD products, but for various reasons, those have managed to stay relevant with Korean consumers.

Korean innovation in your kitchen

Korean innovation goes beyond great brewing techniques and cozy cafés. Companies are showing their skill and originality in designing attractive, high-quality roasters and brewing equipment — and the world is taking notice.

Stephen Kim of the Cafflano group says the company started developing their portable, sustainable brewing products once they realized that Korea’s market was about to shift from purchasing out-of-home coffee in specialty cafés to home brewing.

“We thought soon people would enjoy brewing their own quality coffee, selecting specialty beans by themselves,” he says. This led to the invention of an all-in-one pour-over coffee maker. They set themselves apart by making the product completely portable, as well as sustainably built. Now they’re available in more than 80 countries and won Specialty Coffee Association (SCA) awards for best new product three years in-a-row.

The demand for great products is strong enough that developers from other industries have started to jump ship. They’re coming from the ceramics industry and automotive manufacturing for a chance to create home brewing and roasting products that coffee drinkers are excited about. Yongsoo Jeon works for CM Tech, a brand that specializes in ‘ceramics engineering,’ and has now expanded into coffee. Under the brand Ceroffee, they took their skills in ceramics and used them to create flame-retardant ceramic coffee roasters. Innovations like this are what’s getting Korean brands international attention.

As Miji Kim of Taehwan Automation says, other countries now have their eye on Korea’s brewing and roasting products.

“Korea is introducing different products from the ones existing now,” she says. Their company is the maker of small roasters like the THCR-01, popular in roasting labs and academies, where Koreans have been flocking to earn their barista certifications. “Koreans are known to be skilled with their hands. I expect Korean products will see a good response in the global market in the future.”

Coffee drinkers on the peninsula also show a keen interest in the story behind their beans, wanting to know where they came from, how they’re grown, and who’s supplying them. The result has been café owners and roasters who literally go the extra mile (or 1,000) to buy direct, and develop sustainable relationships with growers.

“Korean customers want to consume a cup of coffee with a particular story,” said Hyun-ki Lee, owner of MOMOS, one of Korea’s largest independent cafés. “It’s easier for consumers to feel the difference in flavor when they know the story behind the bean.”

Lee spends several months every year traveling to origin countries, building relationships with growers, and finding the best beans. He says his customers have evolved over the years, and now demand more than just great taste from their coffee.

“Customers of specialty coffee have a relatively high economic and educational level. They don’t regard coffee as a mere drink, but want to know if their coffee has come to them through a trustworthy path, that their consumption is causing a good deed for the sustainable development of society.”

Lee says this is good for suppliers as well. His spending so much time with growers has allowed for better access to high-quality beans, as his relationship with suppliers deepens. According to Lee, good relationships are the recipe for any lasting business partnership.

Coffee doubles down

The Korean coffee market has come a long way in a short time, and it’s not slowing down. In 2017, Seoul hosted the World Barista Championship, allowing the country’s baristas and vendors to show the world just how busy they’ve been. A thirst for specialty coffee and RTD products makes the Korean coffee industry an exciting place to be, while Korean designed products are wowing buyers at home and abroad with appealing designs and new innovation. With a majority of Korean coffee imported from overseas, opportunities abound for growers who can tell the right origin stories. The Korean market is still growing, and as Lee so plainly put it, “for the time being, this growth and diversity will continue to expand.”